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Gov. Likely To Propose New Taxes In Budget Speech

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Gov. Likely To Propose New Taxes In Budget Speech

Gross Receipt Tax A Possible Solution To Fiscal Crisis

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by Mike Flannery
CHICAGO (CBS) ― Governor Rod Blagojevich will deliver his budget address on Wednesday, and it's likely to be a taxing event.

As CBS 2 Political Editor Mike Flannery reports, a general receipts tax is considered by some to be a solution to the fiscal crisis.

In the election year budget speech he gave last winter, Blagojevich offered new programs, but only minor sources of new revenue. Insiders say his budget address next week will be very different.

A new tax the governor is considering to pay for vastly expanded health care would ultimately mean higher prices for consumers. But unlike the current retail sales tax, it would be imposed on wholesale business-to-business transactions and could cover both goods and services.

Businesses would pay a percentage, not of their profit, but of their total gross receipts -- hence the term "gross receipts tax."

Some are already objecting, strongly.

"The state can't afford its current existing programs, is what this audited report says. The state credit card is maxed out," said Laurence Msall of the Civic Federation.

Without confirming that the governor will propose a gross receipts tax, a spokeswoman said: "The state has a flawed income tax system that must be changed if we are to address the state's on-going education and health care needs."

The governor's staff has begun to brief key opinion leaders and political figures on the broad outlines of his proposal.

(© MMVII, CBS Broadcasting Inc. All Rights Reserved.)

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